Unlimited time off policies: Flexible vacations or none?

For longtime employees of the Los Angeles Times, a new plan for unlimited vacation may end up costing them in the long run.

The newspaper will be following the new policy of its owner, Tribune Publishing Co., which will let non-union staff take time off when they want, as long as supervisors sign off and performance expectations are being met, according to a memo. It's meant to give workers more flexibility and cut back on paperwork, the company said. The catch for Times workers with unused vacation days is the balances earned in past years will drop as they take time off starting Jan. 1. The newspaper may save money by getting around a California law that lets workers "bank" vacation days, treating them as equivalent to wages.

California law says employers must let workers roll over unused vacation, within reasonable limits, and that it must be paid off when they leave the company. That represents a potential liability for the Times, where longtime staffers have banked time off. For newer companies, like Netflix Inc. and Glassdoor Inc., unlimited vacation means those costs never accumulate.

"The primary justification is to get away from the obligation to pay out vacation upon termination," Daniel Chammas, a labor lawyer in Los Angeles at Venable LLP, said in a phone interview. "You could say that you're doing it for administrative convenience, because you don't track vacation and you're trying to be employee friendly and increase morale, but those are all pretty, I'd say, weak justifications."

The law is pushing firms toward open-ended vacation plans, Chammas said. The website JimRomenesko.com reported on Tribune's change Nov. 14.

Chicago-based Tribune Publishing, spun off in July from Tribune Co., said the change is aimed at helping employees, according to Matthew Hutchison, a spokesman.

Valued Added

"At Tribune Publishing, we need to focus on the value people add while at work and not on procedures that limit their creativity or potential," the company said in the memo. "A performance-driven culture rewards results."

About 1 percent of U.S. workplaces have unlimited paid time off, according to a survey by the Society for Human Resource Management. That's little changed from when the survey began tracking unlimited paid time off three years ago.

They have been become more popular at California technology companies, such as NerdWallet and Zynga Inc., said Bruce Elliott, the society's head of compensation and benefits.

"Silicon Valley has always been an incubator with regard to these emerging kinds of benefits," he said by phone.

Vacation Entitlement

Following the tech industry may carry risks, according to Chammas. Slight legal precedent in the field doesn't bode well for unlimited vacation policies, which may look to the state or employees as "a subterfuge to deprive the employees of accrued vacation," he said.

Paid vacation isn't a legal requirement in the U.S.

"This is not Europe," said Teresa Burlison, a lawyer at Baker & McKenzie LLP in Palo Alto, California. "Paid vacation is not an entitlement in California or in this country, so as a result if you make the decision that you're going to convert to an unlimited vacation policy that doesn't run afoul of any laws."

The policy change also may not add to or reduce the number of vacation days workers take, according to Valerie Menager, a lawyer at Carr McClellan P.C. in Burlingame, California, who has written on the subject.

"The way that it's viewed by the employees can be tremendously different depending on the business," she said. "If we go back to the high-tech startup they would just say, 'Wow, that's great!'"

Flexible Vacations

However, if employees face "a lot of deadlines and they keep coming at you fast and furious, after a while they see this as a no-vacation policy," she said.

Flexible vacations can provide both a financial benefit and a way to keep talented people, according to Burlison. Good companies try and set a standard of reasonable time off, she said.

"If it's a recruiting tool but it's an empty one, it's not going to be much of a retention tool," Burlison said in a phone interview. Companies "who have a longer vision really are aware of the need to have their employees take time off and encourage them to do so and not make them feel as though an unlimited vacation policy is really a subterfuge for no vacation at all," she said.

Tribune's Terms

Tribune Publishing, also owner of the Chicago Tribune, Baltimore Sun and Hartford Courant, said in its memo that the policy could be abused by people taking off too much time, and also by taking too little. The company said that while workers who are on a performance-improvement plan wouldn't automatically be denied time off, they would have to "satisfy all your professional obligations in a timely manner."